Monday, February 01, 2016

Kids Company – perfect storm of British Amateurism

I’ve spent a lot of time on the Boards of large charities –
over 30 years in total. Indeed, I’ve spent half of my working time on arts and
education charities for the last ten years, for free. So it didn’t surprise me
when I read about the rotten fruit that was the Kids Company. Read this report and despair. Don’t think that this is a one-off, or unusual in any way. It was a
perfect storm of what I think lies at the heart of most problems in this area –
British Amateurism.

1. Leadership

Surely someone must have seen the problem when it was
obvious that the organisation as being run by a bowl of fruit? Even now,
Batmanghelidjh’s lack of judgement is so deep that the luxury accommodation,
swimming pool, chauffeur and ridiculous expenses seem normal to her. This is
someone who couldn’t lead a can-can, yet was allowed to chew through tens of
millions of our money without any checks on her behaviour. Part of the problem
here is that we are in thrall to an imported idea of charismatic leadership,
that is tearing organisations apart. This was a surfeit of self-belief (if not narcissism) paired with a complete lack of management skills.

2. Governor
recruitment

Most Governors are NOT recruited objectively. Huge numbers
are friends of friends, resulting in a homogeneity of background and outlook.
Note that this problem is not solved through some 70s notion of a diversity policy and stuffing
your Trustee board with token representatives. That, as we saw in the Kids Co,
simply deepened the amateurism. It’s good to have a heterogeneous group but
they must have ‘skills’ to do the job. Many others are recruited through those
hideous, London-based agencies, such as Odgers, which narrows things down to
their truly awful filtering process. I’ve been through this process (as an interviewer) several times, and
believe me, they do the very opposite of what they promise – finding the same
old people from the same old circuit. In the end, many charities are stuffed
with amateurs, looking for a gong, with little experience of company accounts, risk
registers and organisational management. That was the case at the Kids Co.

3. Chair

The Chair of a charity has to have keen eye for governance.
Yentob was the Chair for 12 years. He clearly does not understand conflicts of
interest and deliberately tried to intervene at the BBC when the fruit hit the
fan. His statement about ‘descent into anarchy’ showed that he had lost the
plot, if he had ever had one. Resignation from the BBC was the only option.
It’s this sort of establishment amateurism that got the BBC into such trouble
over Saville. What was more worrying was his complete lack of financial skills. You cannot have a Chair who doesn;t really understand the concept of 'reserves' and risk. In many ways he was more culpable than the fruitcake CEO. He should have dealt with her lack of skills but he couldn;t becauese he also lacked those skills.

4. Risks

If you don’t run a Risk Register, and deal with risks at every
Trustee meeting, you’re not doing your job. I really believe this and have
introduced Risk management systems to some charities I’ve worked in. This is a
key management tool that forces you to attend to, and manage, the sort of risks
that took the Kids Company down. A glance at a risk register would have exposed
the most obvious risks around governance, funding, management, expenses and
reserves. The board seemed to lack the necessary skills to do this job.

5. Auditing

Charities do not get a great deal from auditors. There’s not
enough fees from the big boys, so you get a formulaic service that often lacks
detail and doesn’t really challenge enough, especially on reserves. To be fair
the Charity Commission is hopeless on this issue, not being nearly clear enough
on the purpose and need for reserves. What happened at the Kids Company, where
there were no reserves, was appalling and the auditors should be punished, as
should the Governors, who let this slide by year after year.

6. Politicians

Cameron loved this mob, as they fitted his, as it turned out,
doomed policy on The Big Society. This was all too cosy but what were Letwin
and Hancock playing at when they made these latest payments? Again we see another
strand of British amateurism – the public schoolboy. All three went to Eton,
where their knowledge of poverty, and the real needs of this charity, was
hardly enhanced. They have proved to be inept in the sense of being unable to
judge impact. This was all about appearances trumping reality. Politicians love a little bit of colourful,PR and there is no bigger cornucopia of colour than

Batmanghelidjh.

7. Charity Commission

Run by the hapless William Shawcross (guess what an old-Etonian), the CEO is from KPMG and it has a surfeit of lawyers on its board, who don’t seem to have a grip on operational matters - lawyers rarely do. This is an inept, amateurish, toothless organisation. Charities are running amok, with poor governance, no policing and when found out, the Charity Commission appears has no teeth – it doesn’t even seem capable of gumming them to death.

Conclusion

Every facet of British amateurism was at work here;
recruitment, chair, governance, finance, risks, auditors, the Charity Commission
and politicians. There are many charities that are well run with good people
doing good work, usually for free, but many should not be charities at all and are
run as establishment fiefdoms.